SAN FRANCISCO Top-tier EDA vendor Synopsys Inc. Wednesday (Nov. 30) reported net losses for its fiscal fourth quarter and fiscal 2005, but offered better-than-expected guidance for the current quarter based largely on strong fourth quarter bookings.
Synopsys Chairman and CEO Aart de Geus characterized the quarter as a strong one in all respects, particularly with regard to order bookings. Synopsys' revenue backlog now stands at $1.9 billion, up from about $1.5 billion at this time last year, he said, equivalent to a book-to-bill ratio of 1.6 for the year.
"This is one of the few quarters that we really have nothing to quibble with," de Geus said of the results.
Year-to-year, Synopsys narrowed its net loss for the quarter, posting a net loss of $11.1 million, or 8 cents per share, based on generally accepted accounting principles (GAAP). The loss represented a 61 percent improvement from the $28.4 million GAAP net loss that the company reported for the fourth quarter of fiscal 2004. By contrast, Synopsys reported a GAAP net income of $17.5 million for the third fiscal quarter of 2005.
Synopsys reported fourth quarter revenue of $254.8 million, up 11 percent from the revenue of $230.6 million that the company reported for the fourth fiscal quarter of 2004 and up about 1 percent over the revenue of $251.5 million that the company reported for the third fiscal quarter of 2005.
For fiscal 2005, Synopsys reported revenue of $991.9 million, down 9 percent from the revenue of $1.09 billion reported for fiscal 2004. Synopsys reported a GAAP net loss of $13.1 million, a sharp contrast from the GAAP net income of $74.3 million reported for fiscal 2004.
On a non-GAAP basis, excluding accounting items, Synopsys posted a fiscal fourth quarter net income of $14.9 million, or 10 cents per share, which was in line with analyst expectations. Non-GAAP fourth quarter income was up significantly from the non-GAAP income of $1.8 million that the company reported for the fourth quarter of fiscal 2004, but down about 2 percent from the non-GAAP income of $15.2 million that the company reported for the fiscal third quarter of 2005.
Synopsys' customer environment looks solid, de Geus said, and is increasingly being driven by consumer electronics demand. Customers are seeking "efficient differentiation," de Geus said, explaining that technologically differentiated products are necessary for success, but must also be delivered as quickly and efficiently as possible.
"Increasingly, customers are turning to Synopsys to meet this need," de Geus said.
Synopsys said it currently expects fiscal 2006 first quarter revenue of between $254 million and $262 million. The company expects to report in the range of a loss of 5.6 million to net income of $2.8 million on a GAAP basis for the quarter. Analysts had been expecting fiscal first quarter revenue guidance to be around $252 million.
Synopsys expects to earn revenue between $1.05 billion and 1.08 billion in fiscal 2006. The company expects to report a fiscal 2006 GAAP net income of between $11.5 million and $30.3 million, exceeding analysts' expectations.
The industry's focus on design-for-manufacturing (DFM) is beneficial to Synopsys for two reasons, de Geus said. For one thing, DFM is an adjacent growth market in its own right, enabling the company to "sell into a different budget," he said. Secondly, the focus on DFM also gives Synopsys a competitive advantage, de Geus said.
DFM, Synopsys' fastest growing business segment, accounted for 18 percent of the company's revenue in the fourth quarter and is growing about twice as fast as traditional core EDA tool revenue, according to de Geus.
According to de Geus, Synopsys has tracked 20 65-nanometer tapeouts to date, 75 percent of which utilized Synopsys' place-and-route tools. While he acknowledged that some of these tapeouts also used other tools from competing vendors, he said that more than half of the 15 that Synopsys was involved with utilized only Synopsys. He said the company is already tracking eight 45-nm designs.